THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, Millions of Dollars Except Per Share Amounts)
THIRD QUARTER
YEAR TO DATE
2006
2005
2006
2005
NET SALES
$
1,012.7
$
834.9
$
2,999.3
$
2,445.9
COSTS AND EXPENSES
Cost of sales
634.9
530.6
1,912.9
1,553.9
Selling, general and administrative
231.9
179.1
715.3
551.9
Interest-net
16.5
8.1
49.5
23.9
Other-net
15.4
12.6
45.6
34.1
Restructuring charges
0.9
2.3
10.0
3.9
899.6
732.7
2,733.3
2,167.7
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
113.1
102.2
266.0
278.2
Income taxes
22.9
25.8
62.3
70.7
NET EARNINGS FROM CONTINUING OPERATIONS
90.2
76.4
203.7
207.5
Earnings (loss) from discontinued operations (including loss
on disposal of $1.5 million in 2006) before income taxes
0.5
0.4
(1.0
)
2.6
Income taxes (tax benefit) on discontinued operations
0.2
(0.1
)
(0.2
)
0.7
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS
0.3
0.5
(0.8
)
1.9
NET EARNINGS
$
90.5
$
76.9
$
202.9
$
209.4
BASIC EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
1.11
$
0.92
$
2.49
$
2.50
Discontinued operations
—
—
(0.01
)
0.02
Total basic earnings per share of common stock
$
1.11
$
0.92
$
2.48
$
2.52
DILUTED EARNINGS PER SHARE OF COMMON STOCK
Continuing operations
$
1.09
$
0.89
$
2.43
$
2.43
Discontinued operations
—
—
(0.01
)
0.02
Total diluted earnings per share of common stock
$
1.09
$
0.90
$
2.43
$
2.46
DIVIDENDS PER SHARE
$
0.30
$
0.29
$
0.88
$
0.85
AVERAGE SHARES OUTSTANDING (in thousands)
Basic
81,206
83,566
81,853
83,160
Diluted
82,867
85,483
83,669
85,242
1
-Page 8-
THE STANLEY WORKS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, Millions of Dollars)
September 30, 2006
December 31, 2005
ASSETS
Cash and cash equivalents
$
241.3
$
657.8
Accounts and notes receivable
763.8
609.6
Inventories
619.2
460.7
Other current assets
98.7
84.2
Assets held for sale
2.5
13.3
Total current assets
1,725.5
1,825.6
Property, plant and equipment
498.0
467.1
Goodwill and other intangibles
1,612.2
1,060.4
Other assets
202.2
192.0
Total assets
$
4,037.9
$
3,545.1
LIABILITIES AND SHAREOWNERS’ EQUITY
Short-term borrowings
$
322.4
$
170.2
Accounts payable
434.8
327.7
Accrued expenses
507.8
374.3
Liabilities held for sale
—
3.1
Total current liabilities
1,265.0
875.3
Long-term debt
823.3
895.3
Other long-term liabilities
426.5
329.6
Shareowners’ equity
1,523.1
1,444.9
Total liabilities and equity
$
4,037.9
$
3,545.1
2
-Page 9-
THE STANLEY WORKS AND SUBSIDIARIES SUMMARY OF CASH FLOW ACTIVITY (Unaudited, Millions of Dollars)
THIRD QUARTER
YEAR TO DATE
2006
2005
2006
2005
OPERATING ACTIVITIES
Net earnings
$
90.5
$
76.9
$
202.9
$
209.4
Depreciation and amortization
30.0
23.4
91.3
70.7
Changes in working capital
(43.5
)
(45.2
)
(42.0
)
(70.6
)
Other
40.3
19.5
67.6
2.8
Net cash provided by operating activities
117.3
74.6
319.8
212.3
INVESTING AND FINANCING ACTIVITIES
Capital and software expenditures
(21.2
)
(17.0
)
(59.8
)
(44.0
)
Proceeds (taxes paid) from sale of business
—
(1.9
)
0.9
(20.6
)
Business acquisitions and asset disposals
(24.4
)
(2.3
)
(540.2
)
(108.4
)
Cash dividends on common stock
(24.3
)
(24.2
)
(71.6
)
(70.6
)
Other
(13.2
)
(16.7
)
(65.6
)
119.4
Net cash used in investing and financing activities
(83.1
)
(62.1
)
(736.3
)
(124.2
)
Increase(Decrease) in Cash and Cash Equivalents
34.2
12.5
(416.5
)
88.1
Cash and Cash Equivalents, Beginning of Period
207.1
325.6
657.8
250.0
Cash and Cash Equivalents, End of Period
$
241.3
$
338.1
$
241.3
$
338.1
Free Cash Flow Computation
Operating Cash Flow
$
117.3
$
74.6
$
319.8
$
212.3
Less: capital and software expenditures
(21.2
)
(17.0
)
(59.8
)
(44.0
)
Free Cash Flow (before dividends)
$
96.1
$
57.6
$
260.0
$
168.3
Free cash flow is defined as cash flow from operations less capital expenditures; the company believes this is an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners.
The change in working capital is comprised of accounts receivable, inventory and accounts payable.
3
-Page 10-
THE STANLEY WORKS AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION (Unaudited, Millions of Dollars)
THIRD QUARTER
YEAR TO DATE
2006
2005
2006
2005
NET SALES
Consumer Products
$
347.9
$
289.8
$
989.4
$
808.3
Industrial Tools
432.8
332.7
1,346.4
1,030.1
Security Solutions
232.0
212.4
663.5
607.5
Total
$
1,012.7
$
834.9
$
2,999.3
$
2,445.9
OPERATING PROFIT
Consumer Products
$
64.0
$
57.0
$
152.0
$
140.0
Industrial Tools
41.6
29.8
115.6
104.6
Security Solutions
40.3
38.4
103.5
95.5
Total
$
145.9
$
125.2
$
371.1
$
340.1
4
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